Wage hike won’t wash for some local businesses

David Fusco pays Jesse Roberts the minimum wage of $7.25 an hour to soap car windows and wipe them clean at Colonial Car Wash.

It is here, in the damp bay of a Schenectady car wash, where the economics of the growing push to boost New York’s minimum wage will play out.

Business lobbies are trying to unite to block the effort, which is led by the Assembly’s most powerful legislator. The minimum wage will be the headline issue at a small business lobby day on April 18.

But the business community shows signs of splintering.

A key trade group refuses to adopt a more popular, hard-line stance against any wage hike. Other employers with low-end jobs question whether market forces make the minimum wage debate moot in the Capital Region.

“I can’t make a living on minimum wage,” Roberts said. “It’s not feasible.”

Roberts said he has completed schooling to become a medical assistant. He has not one job interview to show for it.

Roberts, 21, lives at home with his mother. He cannot afford health insurance. He is behind on his bills. He borrows his brother’s car to get to work.

“You do what you’ve got to do,” Roberts said.

Fusco hired Roberts three months ago. Fusco likes what he sees so far.

A hike in the minimum wage—coming off a peak season where sales were down 35 percent—alters Fusco’s perspective.

Daily capacity is 600 vehicles or more at the location where Roberts works. On a recent weekday, 50 came through.

“It’s one more reason pushing us to do more self-service locations,” Fusco said, watching Roberts dry a windshield. “It definitely drives employees out, but we don’t have a choice. It’s just survival.”

About 30 of Fusco’s 45 employees make minimum wage.

Assembly Speaker Sheldon Silver (D-Manhattan) wants to raise the rate to $8.50—more than some of Fusco’s assistant managers earn.

“It snowballs,” Fusco said. “I can’t be paying guys $8.50 to wash windows. We can’t absorb that, so it all rolls back onto the consumer.”

Silver has said raising the minimum wage is his No. 1 priority for the rest of the legislative session, set to end in June.

Close to 20 states have a higher rate than New York, and 22 others have an equal rate. New York last voted to raise the rate in 2004, in a growing economy.

Silver contends higher wages will juice consumer spending and lead workers to be more productive.

His bill boosts the hourly rate by $1.25—a 17 percent increase in one year. The wage has risen a dime over the past five years.

Silver also wants to have the rate update automatically every year, mirroring changes in inflation. Business groups view this as the bigger danger.

“It is absurd to expect anyone to afford the cost of living today and be able to invest in their future on a pay rate of $7.25 an hour,” Silver said in January.

“In order to get a halfway decent, somewhat qualified employee, I have to pay at least $9 an hour,” Crawford said.

“People at $7.25, they need full-time babysitting. I can’t ask someone to be loyal at that wage,” Crawford said. “You can barely eat and live.”

Crawford said he has revenue of $1.5 million and 35 workers, mostly part-time. Crawford lost business as clients cut expenses in the recession, a squeeze that hasn’t totally eased.

Still, Crawford said he is confident he could increase his rates enough to cover a one-time rise in the minimum wage.

“Anything that just automatically goes up each year puts small business in a compromising position,” Crawford said.

“For every dollar I give you, I also have to pay workers’ comp, liability coverage, taxes. But if you are doing a good job, I am going to want to keep you,” he said.

Jack Yonally, whose family owns the B. Lodge & Co. Inc. department store in downtown Albany, said raising the minimum wage would further cut into his profit.

Yonally has 11 employees. He gives them all year-end bonuses and bus passes. Full-time workers also have health care.

“They’ll naturally assume I’ll give them an increase. That money has to come from someplace,” Yonally said. “At this point, to stay in business, you just wouldn’t add any employees.”

Yonally sits on the board of the Retail Council of New York State. The group has 5,000 members, from Yonally to the national chains anchoring Crossgates Mall in Guilderland.

Ted Potrikus, the council’s chief lobbyist, said the council might not oppose a wage increase phased in over a few years, and not tied to inflation.

This puts him at odds with the National Federation of Independent Business and many others opposing Silver’s plan.

“The headline seems to be that somebody is daring to be reasonable,” Potrikus said.

“I can’t be any clearer than this: We oppose the bills currently introduced,” Potrikus said. “But let’s take a look at this. Why not? Why dismiss it out of hand?”

Both sides tout studies seeming to prove their point. Republicans say a wage hike would cost businesses up to $2,800 per worker per year, counting extra taxes. Democrats say a wage increase would create 7,500 jobs and $600 million of consumer spending.

Gov. Andrew Cuomo has not taken a public stance. Neither has the Committee to Save New York, a lobby aligned with Cuomo and backed by New York City CEOs.

“Everyone in Albany is looking for a deal here, but the fact is that they’re not negotiating with their own money,” said Mike Durant, who heads NFIB’s New York office.

“It’s a killer for the Main Street businesses,” Durant said. “Most business groups understand that, and they’re willing to make a stand.”

Everything from taxes to gas prices to a weak winter is working against Fusco at his five Colonial Car Wash locations, which he started in 1977 when he was 19.

“We’re not high-margin. The first thing you do is lay off workers,” Fusco said. “We happen to have no mortgages, so I’m trying to afford to hang on to them.”

Roberts, who is one of Fusco’s newest hires, said he aspires to go back to school and earn his nursing degree.

“I know I’ll have to save a lot of money. I figure I’ll be working here at least a year,” Roberts said.

Asked if he can save while making minimum wage, Roberts shrugs, as if to say, he doesn’t have an answer for that.